The Basics
As stated before, the PTO thoroughly examines each application that comes their way. Every application is examined by a PTO examiner knowledgeable in the subject area of the claimed invention. The examiner checks for novelty, nonobviousness and utility, checking many other details.

Once an examiner has scrutinized the application, he or she will decide if it needs to be changed or if it can be allowed. If it is allowed it will issue into a patent. If it needs changes then the examiner will outline all the issues with it and send out a first Office action (which basically serves to state that the application has been rejected). The examiner will explicitly state under what grounds the application is rejected in the Office action.

After receiving the first Office action, the applicant will have a specified length of time to correct all the problems and send an amended application back (if the deadline passes and the reply is not sent in, then the application will be abandoned).

If the applicant sends an amended application to the PTO, the examiner will once again review the application. If problems still remain with the application, the examiner will send out a second Office Action. In this case, the applicant must again respond within the allotted time period with their revisions. Once the applicant sends their revisions back to the PTO, the examiner will review the application a final time. This time, the examiner will either allow the application to patent (which means they will send out a Notice of Allowance) or they will send out a Final rejection.

The Details
There are times when the prosecution may be much simpler and the application may be allowed without having to go through a first and/or a second Office action. Although it's rare to be lucky enough to receive a Notice of Allowance on the first try it can happen. Alternately, the Final rejection may be sent out at an earlier stage (skipping the first and/or second Office Action) depending on the state of the application.

Since the majority of patent applications will receive an Office action, how should an applicant reply to one? First of all, the response must be in letter form. This letter should distinctly point out and address each and every error and either argue it or amend it.

Above all, the applicant must not include any new claims relating to new matter in the reply. What they should do is present arguments pointing out specific distinctions in the claims or in the overall application that might help overcome the examiner's rejections. We will discuss these details a little later.